When the Lease Ends: Strategic Occupancy Planning for Growing Organizations
A Foundational Guide for Facility Managers & Corporate Real Estate Execs (FM-005)
By David Gray | DavidGrayProjects.com
Introduction: Don’t Let the Lease Expiration Decide for You
Lease expirations are inflection points. Handled late, they force rushed choices and bad economics. Handled early, they unlock portfolio agility, cost savings, and culture wins. This post lays out a clear framework for deciding whether to renew, relocate, resize, or reconfigure—and how to time the work so finance, people, and operations all land smoothly.
1) Start 18–24 Months Out: The Critical Path
Working backward from lease end, a realistic critical path looks like this:
T–24 to T–18 months: Strategy & options (stay, grow-in-place, relocate, hub-and-spoke, flex mix). Begin market scans and test-fit studies.
T–18 to T–12 months: Business case, executive decision, LOI, workplace programming, change plan.
T–12 to T–6 months: Design, permitting, build or retrofit, tech & furniture procurement, move planning.
T–6 to T–0: Pilot space, communications, phased moves, decommission/restore.
The earlier you start, the more choices you keep (and the better your leverage with landlords).
2) The Four Big Decision Paths
A. Renew (as-is or modified)
Use when the location still fits labor access, cost, and brand. Negotiate: rent resets, improvement allowances, termination/expansion rights, and green-lease clauses tied to energy performance.
B. Relocate
Consider when labor shed has shifted, facilities are inefficient, or you need a quality/amenity jump to support culture and talent.
C. Rightsize / Reconfigure
Pair hybrid work data with utilization studies. Convert desk farms to collaboration zones; reduce dedicated seats; create bookable neighborhoods.
D. Flexible Portfolio Mix
Blend core space (brand/culture hubs) with flex/coworking for surge capacity, projects, or new markets.
3) Build the Business Case Like a CFO
Translate real estate moves into P&L and balance-sheet outcomes.
Key inputs
Occupancy demand: headcount scenarios, hybrid ratios, desk-to-employee targets.
Utilization: sensor data, badge data, booking app analytics by day and zone.
Costs: base rent/NNN, TI allowances, furniture/tech, move & restoration, opex deltas.
People outcomes: retention, recruiting reach, commute time deltas, collaboration KPIs.
ESG impacts: EUI/energy savings, carbon reductions, certification potential.
Decision metrics
NPV of each option (5–10 year horizon)
Year-1 and steady-state total occupancy cost
Cost per productive seat (not just per SF)
Payback on retrofit vs. relocate
Risk-weighted scenarios (demand up/down, interest rates, sublease risk)
4) Program the Workplace for How People Actually Work
Move from “butts in seats” to activity-based planning:
Focus work: libraries, phone rooms, quiet zones
Collaboration: team tables, project rooms, AV-first meeting rooms
Community: commons, café zones, town-hall areas
Support: tech bars, wellness rooms, mothers’ rooms, storage/lockers
Ratios that guide fit-out
Collaboration seats as a % of total (often 40–60% in hybrid environments)
Room mix (2–4 person focus rooms vs. 6–10 person team rooms)
Bookable vs. drop-in balance
Locker-to-employee ratio for shared seating
5) Negotiation Playbook: Create Leverage
Run two options in parallel (renewal vs. alt site) until you have meaningful terms.
Ask for expansion/contraction rights, assignability, and early termination (with a formula).
Trade rent for ESG outcomes (e.g., landlord-funded upgrades that reduce your opex).
TI vs. free rent mix: model both—cash flow timing matters.
In a soft submarket, negotiate turnkey buildouts or enhanced TI + longer free rent.
6) De-risking Timeline & Delivery
Design-to-budget with target value design; lock performance specs (acoustics, lighting, IAQ).
Long-lead items (HVAC equipment, glazing, specialty AV) ordered early with alternates approved.
Mock rooms/pilots to validate layouts and AV before bulk procurement.
Phased moves to protect business continuity; weekend cutovers for critical teams.
Decommission plan early: restoration scope, vendor lineup, waste/diversion targets.
7) People & Change Management (Your Secret ROI)
The best floor plan fails without adoption. Build a workplace change plan:
Executive narrative: why we’re changing and how it supports strategy
Champions network per department
Etiquette & room-booking norms (published and reinforced)
Training: AV, desk booking, lockers, neighborhoods
Post-move support: tech bar, roving ambassadors, quick-hit surveys
Track engagement, meeting success rates, booking friction, and sentiment in the first 90 days; tune layouts accordingly.
8) ESG & Resilience: Make Tomorrow Cheaper Than Today
Target lower EUI with high-efficiency HVAC, lighting controls, and commissioning.
Add submetering for transparency and future reporting.
Design for future flexibility (raised floors, demountable walls, modular furniture).
Incorporate resilience (backup power for critical zones, network diversity, flood/fire considerations).
Lock green-lease language: data sharing, performance targets, upgrade triggers.
These moves lower operating costs, de-risk compliance, and protect asset value.
9) The 1-Page Executive Decision Template
Recommendation: Renew/Relocate/Rightsize/Flex mix
Business Rationale: Talent, cost, ESG, brand
5–10 Year NPV: Option A vs. B vs. C
Year-1 Impact: Cash flow, P&L view
Key Risks & Mitigations: Market, schedule, demand
Decision Gates & Timeline: LOI, lease, design, move
People Plan: Change management & comms highlights
KPIs Post-Move: Cost/seat, utilization, EX, energy
Conclusion: Control the Clock, Control the Outcome
Lease expirations shouldn’t be emergencies. With a 18–24-month runway, data-driven demand modeling, and a structured negotiation + delivery plan, you can land the right size, right place, right price—and a workplace people love.
About the Author
David Gray is a capital delivery strategist, owner’s representative, and founder of DavidGrayProjects.com. With over two decades of experience helping organizations bring complex projects to life—from data centers and healthcare facilities to higher-ed campuses—David blends practical delivery with forward-thinking strategy.
He writes about project controls, capital planning, and real estate development to help leaders deliver smarter, faster, and more sustainably.
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